Finance

Digital Cryptocurrency in Barcelona

Barcelona is planning the introduction of a digital payment system or “cryptocurrency”. The new municipal government hopes it will both boost the local economy and increase social equity.

27.05.2017

Many cryptocurrencies have emerged in Spain in the wake of the financial and euro crises in response to an economic system that is felt to be inequitable. These complementary currencies work like normal money except that their validity as a means of payment is restricted to specific regions and participating organisations such as local businesses, bars and shops.

The municipal government of the Catalan metropolis Barcelona is also planning to introduce such a moneda social (social currency or cryptocurrency) – in the teeth of bitter resistance from the central bank of Spain. By so doing, the Mayor Ada Colau and her election platform, which emerged from the Indignados movement (the outraged), want to make good on one of their election promises. The left-leaning municipal government is hoping that it will help with the creation of a “social and solidary economy”, whereby the currency represents just one element of a comprehensive plan, which will also see the introduction of a local minimum wage. The intention is to pilot test the project in certain districts in 2017 before rolling it out throughout the entire city. To save the cost of minting, printing and cash dispensing, a digital currency with a fixed 1:1 exchange rate to the euro is planned.

As such, Barcelona is following an overarching trend involving an increase in currency experiments in the municipal context. There are already several such currencies in Spain, for example, the Res in Girona, the Puma in Seville, and the Ekhi in Bilbao. Complementary currencies also exist in France in places such as Lyon and Toulouse, and in Bristol in England, where the Mayor receives his salary in the local Bristol Pound. Rosenheim is in the vanguard of this movement in Germany, whilst the same role in the USA has been adopted by San Francisco, where the so-called “Bay Bucks” are intended to boost the local economy.

Until now, nobody has taken umbrage at any of the almost 100 cryptocurrencies that are already in circulation or are in preparation within Spain. Yet, Barcelona is different in two respects: first, due to its size and second, because of its political significance as the capital city of Catalonia, which is striving for secession from the central state of Spain.

The social trial series conducted in Barcelona and in other towns and cities are indicative of several developments with relevance for the future. For example, currency experimentation is symptomatic of the fact that the existing monetary system is increasingly being called into question. This is happening both at the local and at the global level, where many other alternative currency and transaction systems have emerged alongside Bitcoin and Ethereum. Moreover, local currencies are indicative of a further power transfer from national states to cities, whose experiments are subverting the states’ and central banks’ instruments of control, such as monetary policy, which is often experienced as being inequitable. This also corresponds to the decentralisation logic behind blockchain technology.

However, such experiments are primarily the pet projects of the avant-garde, as the number of users is still rather small and some 95 per cent of Spaniards have never even heard of alternative currencies. Thus, it remains a minority movement as yet, but – being embedded within more powerful development drivers and with the aid of social media – one that could rapidly gain sufficient traction to become disruptive and transformative.

Dr. Christian Grünwald

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